In an article for PLC Magazine, Monica Kurnatowska and Rob Marsh outline employers’ obligations under the new EU Pay Transparency Directive. It considers key elements including pay reporting, pay transparency, pay assessments and equal value, and remedies and enforcement as well as the practical implications for employers in the EU and in the UK in the light of the UK’s withdrawal from the EU.
The EU’s recently adopted Pay Transparency Directive (2023/970/EU) (the Directive) is intended to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.
For employers in the EU, the measures in the Directive are significant and touch on many aspects of the employment lifecycle. They include pre-employment pay transparency requirements and worker and representative rights to workforce pay information. The most significant and onerous obligation is likely to be the requirement to conduct detailed pay audits in certain circumstances, including an equal value assessment, and to co-operate with worker representatives to address pay gaps.
While the Directive does not apply to Great Britain, there may be considerable indirect effect as multinational employers with operations in EU member states grapple with its implications and consider whether to adopt a harmonised approach across their international operations.
British employers should prepare for expectations to be raised and for increasing calls to match the requirements of the Directive. Increased transparency and rights to information will also give British employees access to the pay information of any colleagues in the EU. Therefore, although the Directive does not apply directly in Great Britain, British employers cannot simply ignore it.
This article first appeared in the November 2023 issue of PLC Magazine. Click here to access the full briefing.
To discuss what these issues mean for your business, please get in touch with your usual Baker McKenzie contact.
